Tax Reform and Electric Co-ops

How will the new federal tax changes affect Great Lakes Energy?

They have very little impact on us because a not-for-profit electric cooperative does not pay federal taxes on its electricity sales.

For-profit investor-owned electric utilities (IOUs) pay federal taxes. Therefore, the federal corporate tax reduction will result in lower expenses and higher profits for them.

That’s just one difference between the two business models. Another difference is what the companies do with their profits.

IOUs pay their profits in the form of dividends to shareholders/investors, who may not even be their customers. Electric co-ops, owned by the members they serve, don’t have shareholders/investors. Instead, they return profits to their members in the form of capital credit refunds.

GLE returned over $10 million in capital credit refunds to its members this past December and over $66.4 million since 2003.

That’s the cooperative difference. 

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